Category Archives: economics

The Icelandic Response to Crisis

If you’re looking for a sensible and coherent response to a major crisis, you could do a lot worse today than look to Iceland. The country’s current currency crisis happened because it’s so small. But the solution, too, is something … Continue reading

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The Downside

The S&P 500 closed today at its lowest end-of-day level since October 2004 — lower, even, than it closed on Monday. I spent much of the afternoon talking to perennial pessimist Bill Rhodes, at Citibank, who was keeping one eye … Continue reading

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How Bad Could Things Get?

Your cheery upbeat forecast, on a day when stocks are up 3%, comes from Willem Buiter: If the markets fear that the nays have thrown their toys out of the pram for the long term, the following scenario is quite … Continue reading

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McCain’s Economics

Don’t ask me who won the debate in terms of persuading formerly undecided voters to fix an allegiance. The number of undecided voters who understand the difference between financial and fiscal is minuscule, and the number of those who think … Continue reading

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When it Rains, it Pours

This is really, really bad. In a nutshell: the bailout package, which everybody thought was a done deal, has been undone by some combination of Republican recalcitrance and the heat of the presidential campaign. At the same time, WaMu’s gone … Continue reading

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Didn’t Panic

I was right about what Bush was going to say, but I was wrong about how he said it. This was one of the best speeches of his presidency, if not the best. I was watching in a noisy bar, … Continue reading

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Academic Economists vs Paulson

A very long list of economists has signed a letter critical of Hank Paulson’s bank bailout plan. I’m not a huge fan of the Paulson version of the plan myself, but the arguments given in the letter are, I think, … Continue reading

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Larry Summers, Politician

Lloyd Grove has a long interview with Larry Summers today. The political bit is the most interesting: Summers all but says he’d love to return as Treasury secretary ("I’m very happy right now doing what I’m doing, teaching and consulting … Continue reading

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Trusting Uncle Sam

Arnold Kling has a cute response to my blog entry on the Social Security trust fund: A trust fund = an obligation to borrow? If your uncle Louie told you he was setting up a trust fund for you, and … Continue reading

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How to Think about the Social Security Trust Fund

If you want to start a heated debate among policy wonks, just ask them about the Social Security trust fund. A large contingent of people will tell you that it’s real government debt; another large contingent will tell you that … Continue reading

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In Search of Executive Economists

Richard Baldwin has forgotten his Oxford comma: I was on panel with Alan Blinder, the CEO of Boston Consulting Group and the UAE trade minister. I’m glad he did, because the vision of Blinder — or any Nobel economics laureate … Continue reading

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Chart of the Day: U6

Brad DeLong sums up in two words: "Recession city". U6 is a very broad gauge of unemployment, but even so, any unemployment figure which is above 10% and rising has to be very worrisome indeed.

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Drilling for Revenues

Free Exchange has it right, I think, and Tyler Cowen is being needlessly self-abnegating. Drilling for US oil might well make sense as a matter of fiscal policy, especially for Alaska; it gets us nowhere fast as a an "energy … Continue reading

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Unemployment Passes 6%

I don’t know much about GDP, but this feels like a recession to me. The unemployment rate of 6.1% is up from just 4.9% in the first quarter of this year: that’s one torrid growth rate you don’t want to … Continue reading

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Goolsbee 1-0 Salmon

Back in March 2006, Austan Goolsbee was a little-known Chicago economics professor, and I was an all-but-unknown blogger. In a fit of dudgeon, I took it upon myself to attack an article that Goolsbee wrote in Slate on the subject … Continue reading

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Blurb Whore of the Day

Rachel Donadio had an entertaining essay in Sunday’s NYT Book Review on blurbing. It’s a fine art, she says: "Blurb too often, or include too many blurbs on your book, and you might get called a blurb whore." Well. I … Continue reading

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The Destroyer of Swedish Capitalism

For a wonderful real-world example of Martin Wolf’s take on global capitalism, check out Niklas Magnusson’s profile of Swedish activist investor Christer Gardell. This being Sweden, Gardell isn’t only unpopular with unions and other leftists, he’s even unpopular with shareholders: … Continue reading

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Martin Wolf on Capitalism

Give Bill Gates, Mike Kinsley, and Conor Clark credit: if their Creative Capitalism project achieves nothing else, it has certainly brought into being one of the most interesting, diverse, and provocative group blogs on the internet. And Martin Wolf’s tour … Continue reading

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When Savings Start to Rise

Paul Kedrosky quotes David Rosenberg today on the implications of a rising savings rate: The savings rate is going to be forced higher. This, again, is going to be very, very disinflationary. It means that fashions are going to change. … Continue reading

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GDP Statistics and the 2008 Election

Is it weird to link to Dean Baker three times over the course of three successive blog entries? Not when he comes out with stuff like this: It is very likely that the third quarter GDP number will be negative. … Continue reading

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Nassim Taleb and the Ubiquity of Moral Hazard

Nassim Taleb would be the first to tell you that the runaway success of his books was an utterly unpredictable black swan event. You might or might not believe him — but in his interview today with Lloyd Grove, there’s … Continue reading

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Oil Datapoints of the Day

Krishna Guha: At today’s prices the value of oil in the ground exceeds the combined value of all the world’s equity and debt markets. Oil-importing nations are paying oil-exporting nations roughly $1,500bn per annum for oil – about 2.5 per … Continue reading

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On Risk Aversion

I’ve been thinking a bit more about the downside of risk aversion, which is something that Steve Waldman brought up yesterday and which I then applied to the ARS fiasco, among other things. The problem is that it’s entirely natural, … Continue reading

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When Safety is Worse Than Risk

Steve Waldman has a corker of a blog entry today, blaming a large part of the present crisis on "investors’ childlike demand for safety". It’s a very powerful insight. Think of the enormous emerging-market central bank reserves that everyone was … Continue reading

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Supply and Demand in the Oil Market

Stan Collender just doesn’t believe that the volatile oil price can really be function of old-fashioned supply and demand: It’s not that I’m not a big believer in this most basic rule of economics. It’s just that the higher prices … Continue reading

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